According to a recent study by the UK Cryptoasset Business Council, traditional banks either block or delay almost 40% of transactions sent to cryptoasset exchanges in the UK. As the results are based on a report named Locked Out: Debanking the UK’s Digital Asset Economy, which looks at the increasing banking difficulties the digital asset industry is facing.
Around ten of the biggest centralized cryptocurrency exchanges in the UK, which together service millions of UK consumers and have handled hundreds of billions of pounds in transactions, provided replies for the poll. The survey included major UK-based exchanges like Coinbase, Kraken, OKX, Gemini, and Bitpanda.
The results show the magnitude of the crypto debanking issue and how it is impeding the expansion of the sector in the UK. According to the survey, 70% of exchanges think that the banking environment for digital asset companies in the UK has gotten harder over time.
While 60% of respondents stated they frequently experience difficulty with both card payments and bank transfers. Both regular users and institutional investors find it more difficult to transfer money into and out of cryptocurrency platforms as a result of these issues.
Major Banks Tighten Crypto Transaction Limits
With that, traditional major banks, such as Barclays and HSBC UK, have posted transaction limitations that limit transfers to £2,500 ($3,180) per transfer and £10,000 ($12,700) during 30 days. Then, Metro Bank, Starling Bank, and a few more banks have halted both bank transfers and debit card transactions.
The restrictions are broad and opaque, according to the findings. All surveyed firms said banks provide no clear explanations on these Blanket transaction limits or outright prohibitions on crypto-asset exchanges are frequently applied without distinguishing between FCA-registered UK businesses and high-risk platforms, noted in the report.
UKCBC Calls For Fair Banking Access
For UKCBC, the worry extends beyond consumer discomfort. The paper concludes that anti-competitive debanking tactics undermine domestic innovation and drive competition abroad.
As per the report, it advises that the government and FCA make clear that blanket bans are inappropriate. With that, Banks should implement elaborate, risk-based frameworks that distinguish between different exchanges and remove extra obstacles for FCA-registered businesses.
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